Small and medium-sized enterprises (SMEs) will increasingly look to cancel their cyber insurance policies this year due to expensive premiums and the cost-of-living crisis.
That is according to data and analytics firm GlobalData, which found that 17.3% of UK SMEs did not have cyber insurance in 2021 due to it being too expensive, while 29% cancelled their policy to cut costs.
Smaller businesses were found to be most exposed to rising costs, as only 21% of micro businesses had cyber insurance, compared to 40.1% for small businesses and 54.3% of medium businesses.
However, the situation has been made worse due to the war in Ukraine and shift to home working, according to GlobalData, which said that the rising level of cyber risk means that insurers cannot respond to the cost-of-living crisis by lowering premiums.
Senior insurance analyst, Ben Carey-Evans, explained: “With SME budgets being squeezed, and insurers not being able to lower the costs of premiums, the rising costs will be a big issue for cyber insurers going forward.
“Businesses and consumers have been hit hard by the cost-of-living crisis, with sky-high fuel and energy prices leaving consumers with a smaller disposable income to spend. GlobalData expects the number of businesses cancelling their cyber insurance policy to only increase this year.”
The firm said that innovation will be needed to counter the continuously evolving cyberthreat landscape, which includes the fallout from the Ukraine-Russia conflict. It forecasts that the global cybersecurity industry will grow from $125.5bn in 2020 to $198bn in 2025.
This comes after separate research recently found that most business leaders are no more confident in their ability to manage cyber risks than they were two years ago.
“No one – not even security providers themselves – is safe from attack,” said David Bicknell, thematic analyst at GlobalData. “Today’s always-connected world offers a myriad of opportunities for cyberattackers to disrupt countries, organisations, and individuals.
“A challenging worldwide geopolitical environment exacerbated by the COVID-19 pandemic – and, since February 2022, the Ukraine-Russia conflict – has gifted cyberattackers an uneven playing field, which they are actively exploiting.
“The Biden administration’s top cyber officials recently warned that more frequent cyberattacks are the 'new normal' for US companies and individuals. Or to put it more starkly, things are bad out there and they’re unlikely to get better anytime soon.”
Image credit: iStock
Author: Chris Seekings